After years of a low interest rate environment, many investors have turned to equities not only for the growth potential but also for solid and dependable dividends that help to provide an income stream. What this equates to is total return, which is one of the most powerful investment strategies going.

We always like to remind our readers about the impact total return can have on portfolios because it is one of the best ways to help improve the chances for overall investing success. Again, total return is the combined increase in a stock’s value plus the dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%: 10% for the increase in stock price and 3% for the dividends paid.
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Five companies are expected to raise their dividends this week, so we screened our 24/7 Wall St. research universe and found that the stocks of all five are rated Buy at some of the top firms on Wall Street. While it is always possible that not all five do raise their dividends, top analysts expect them to, and generally the data is based on past increases in the firm’s dividend payouts. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Bonanza Creek Energy

This stock is way off the radar but offers solid upside potential. Bonanza Creek Energy Inc. (NYSE: BCEI) engages in the extraction of oil and associated liquids-rich natural gas. It is focused on the Niobrara and Codell formations in the Denver-Julesburg Basin.

The company’s primary oil and liquids-weighted assets are located in the Wattenberg Field in Colorado. As of December 31, 2020, the company had proved reserves of 118.2 million barrels of oil equivalent. The company announced in May that it entered a definitive agreement with Extraction Oil & Gas to merge in an all-stock deal of equals, wherein shareholders of both companies will have equal percentage shareholdings in the combined entity. Notably, the deal, which is valued at $2.6 billion, is expected to complete in the third quarter of 2021.

The merged entity, renamed as Civitas Resources, will be regarded as the largest pure-play oil and gas company in the Denver-Julesburg Basin of Colorado. In fact, a majority of the companies’ operations are based in this basin, spreading across the Front Range and parts of Wyoming and Nebraska.

Shareholders currently receive a 3.64% annual dividend. The company is expected to raise the dividend to $0.40 per share from $0.35.

Truist Securities has a massive $60 price target, but the Wall Street consensus target is even higher at $62.17. The shares were trading early Monday near $39.50.

Cable One

While somewhat pricier than shares of the other companies raising dividends this week, this is a solid idea for growth investors. Cable One Inc. (NYSE: CABO) provides data, video and voice services in the United States.
It offers residential data services, a service to enhance Wi-Fi signal throughout the home. The company also provides residential video services, such as local networks; local community programming that includes governmental and public access; and other channels, as well as digital video services, including national and regional cable networks, music channels and an interactive and electronic programming guide with parental controls.

In addition, Cable One offers premium channels that offer movies, original programming, live sporting events and concerts and other features. It offers advanced video services, such as whole-home DVRs and high-definition set-top boxes, as well as its TV Everywhere product, which enables video customers to stream various channels and shows to mobile devices and computers. Further, it provides residential voice services comprising local and long-distance calling, voicemail, call waiting, three-way calling, caller ID, anonymous call rejection and other features, as well as international calling by the minute services.
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Cable One shareholders receive a 0.53% dividend. The company is expected to raise its $2.50 per share dividend to $2.75.

Wells Fargo’s $2,050 price target on the company is less than the $2,090.17 consensus target. The stock traded early Monday near $1,890.00.

Illinois Tool Works

Investors looking for a strong industrial idea may want to consider this venerable company. Illinois Tool Works Inc. (NYSE: ITW) manufactures and sells industrial products and equipment worldwide. It operates through these segments:

• Automotive OEM: Offers plastic and metal components, fasteners, and assemblies for automobiles, light trucks and other industrial uses.
• Food Equipment: Provides warewashing, refrigeration, cooking and food processing equipment; kitchen exhaust, ventilation, and pollution control systems; and food equipment maintenance and repair services.
• Test & Measurement and Electronics: Produces and sells equipment, consumables and related software for testing and measuring of materials and structures, as well as equipment and consumables used in the production of electronic subassemblies and microelectronics.
• Welding: Produces arc welding equipment and metal arc welding consumables and related accessories.
• Polymers & Fluids: Produces adhesives, sealants, lubrication and cutting fluids, as well as fluids and polymers for auto aftermarket maintenance and appearance.
• Construction Products: Offers engineered fastening systems and solutions for the residential construction, renovation/remodel and commercial construction markets.

Shareholders receive a 2.01% dividend, but the company is expected to raise that dividend from $1.14 per share to $1.23.

Credit Suisse recently raised its $250 price target to $268. That compares with a $243.64 consensus target and a recent share price near $227.80.

ResMed

This company is in a sweet spot in the health care industry, and the stock looks to trade even higher. ResMed Inc. (NYSE: RMD) develops, manufactures, distributes and markets medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders comprising sleep apnea, chronic obstructive pulmonary disease, neuromuscular disease and other chronic diseases.
ResMed offers various products and solutions for a range of respiratory disorders, including technologies to be applied in medical and consumer products, ventilation devices, diagnostic products, mask systems for use in the hospital and home, headgear and other accessories, dental devices, portable oxygen concentrators and cloud-based software informatics solutions to manage patient outcomes, as well as provides customer and business processes.
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The company’s U-Sleep enables automated patient coaching through a text, email or interactive voice phone call. Its AirView enables remote monitoring, over-the-air troubleshooting and changing of device settings. Its myAir is a patient engagement application that offers sleep data and a daily score based on the previous night’s data, as well as connectivity module and propeller solutions. In addition, it provides business management software and services to out-of-hospital providers for home medical equipment, pharmacy, home infusion, orthotics and prosthetics, and it offers HEALTHCAREfirst and MatrixCare solutions.

Shareholders currently receive a 0.57% dividend. The $0.39 per share dividend is expected to increase to $0.43.

The $270 Oppenheimer price target is less than the $228.33 consensus target. The shares were trading near $266.30 Monday morning.

Standard Motor Products

With strong demand for auto parts expected to continue, this may be a solid way to play that momentum. Standard Motor Products Inc. (NYSE: SMP) manufactures and distributes replacement parts for motor vehicles in the automotive aftermarket industry.

The Engine Management segment offers components for the ignition, electrical, emissions, fuel and safety-related systems of motor vehicles under the Standard, SMP Blue Streak, Intermotor, Standard Diesel, BWD Select, BWD, OEM, TechSmart, Tech Expert, GP Sorensen, LockSmart and Pollak brand names, as well as under private labels comprising NAPA Echlin and NAPA Belden.

This segment’s products include electronic ignition control modules, camshaft and crankshaft position sensors, distributor caps, rotors, ignition wires and coils, switches and relays, EGR valves and variable valve timing components, mass airflow and fuel pressure sensors, and new and remanufactured diesel injectors and pumps, as well as anti-lock brake, vehicle speed, tire pressure monitoring, and park assist sensors.

The Temperature Control segment provides components for the temperature control systems, engine cooling systems, power window accessories and windshield washer systems of motor vehicles under the Four Seasons, EVERCO, ACI, Hayden, Pro Source and Factory Air brands.

The company also provides air conditioning compressors, air conditioning repair kits, clutch assemblies, blower and radiator fan motors, filter dryers, evaporators, accumulators, hose assemblies, thermal expansion devices, heater valves and cores, A/C service tools and chemicals, fan assemblies and clutches, oil coolers, window lift motors, window regulators and assemblies, and windshield washer pumps.

The company sells its products primarily to automotive aftermarket retailers, program distribution groups, warehouse distributors, original equipment manufacturers, and original equipment service part operations in North America, Europe, Asia and elsewhere.

Shareholders receive a 2.39% dividend, but the company is expected to raise that dividend to $0.27 per share from $0.25.

Stephens has set a $54 price target. The higher consensus target is $56, and both are well above the recent price near $42.30 per share.

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These five top stocks are rated Buy across Wall Street, and the companies are expected to lift the dividends they pay to shareholders soon. Not only is increasing dividends and returning capital to investors important, but it also shows that the company is doing well and has the earnings and cash flow strength to increase the payouts.

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